BELARUS NEWS AND ANALYSIS
DATE:
06/12/2010
Averse pipeline extends to the West
Expanding the oil pipeline Odesa-Brody will provide additional pumping of 15-20 million tons of oil per year
By Natalia BILOUSOVA, The Day
Poland plans to increase its energy security by means of intensifying cooperation with Ukraine. Bogdan Borusewicz, the marshal of the Polish Senate (upper chamber of the parliament) announced this during his meeting with Ukrainian Prime Minister Mykola Azarov, while discussing the question of expanding the oil pipeline Odesa-Brody to Gdansk, Poland. As it is known, the pipeline has recently been tested for the transport of Venezuelan oil to Belarus.
Conversations about the development of this oil pipeline constantly emerge in diplomatic negotiations between the two countries. However, there have been few practical results so far. Thus, as the Polish politician admitted, the Ukrainian side already finished building its part of the oil pipeline, and Poland, unfortunately, did not.
What made the Poles return to this issue? What benefits will Ukraine gain if the project is successfully realized? The Day asked about it Volodymyr OMELCHENKO, a leading expert on energy issues at the Razumkov Center:
"This statement is based mainly on politics. It was provoked by concrete actions of Russia, which seriously started working on and launching the Baltic Pipeline System-2. The Poles are particularly concerned by this. As soon as this system starts working, considerable amounts of the Russian oil, which today is transported to Europe through the Druzhba pipeline, will go through it. This step is part of Russia's energy strategy, which presupposes decreasing its transit dependence on other countries. Conversely, Poland tries to compensate its losses from the transit of Russian energy sources.
"Besides, the fact that Polish investors bought an oil refinery in Lithuania can serve an argument supporting the reanimation of the idea of expanding the oil pipeline Odesa-Brody to Gdansk. There is a refinery, but not enough oil for its successful work.
"Under these conditions, expanding the oil pipeline Odesa-Brody is very appropriate and advantageous for Ukraine. For us it is a possibility to transport even more Caspian oil not only to Poland, but also to Slovakia, Hungary, and Germany. This will considerably increase the utilized capacity of the domestic oil transportation system. Let me remind you, that the productive capacity of the Ukrainian oil transportation system is about 114 million tons per year, but today only 20-25 percent of this potential is used. Expanding the oil pipeline to Gdansk will increase oil transit by 15-20 million tons of oil per year. Then Ukraine can expect to pump about 50 million tons of oil per year.
"In my opinion, today there are favorable conditions for the oil pipeline enlargement. But for this Ukraine and Poland should finally reach an agreement. The Polish party should show political will to finally move from words to deeds. The main problem on the way of realizing the project, in my opinion, comes from the Polish side. Poland must guarantee the purchase of some amount of Caspian oil (from Azerbaijan and Kazakhstan). Only after this one can create a consortium to build the oil pipeline and involve loans for the construction. Unfortunately, the Polish government used to talk a lot about this project, but in fact it did not do anything. According to my estimates, about a billion dollars is needed in order to build the pipeline. The construction process can be completed in two years. That is if Ukraine and Poland finally reach an agreement on this question in 2011, then the finished oil pipeline can start working already in 2013. That is when Russia plans to launch the abovementioned Baltic Pipeline System-2."
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